By Rod Nickel
(Reuters) - The next chief executive of Canada's Potash Corp of Saskatchewan
Potash Corp's long-serving CEO, Bill Doyle, passes the torch to successor Jochen Tilk in July, but the charismatic Doyle will stay on as senior adviser for a year.
Doyle is likely the most recognizable figure in global trade in potash, a key nutrient for improving crop yields. His extended presence signals there will be no imminent change in Potash Corp's practice of scaling back output when demand slips, as the company did in December when it cut 18 percent of its workforce.
Because Potash Corp owns the most potash-producing capacity in the world, a change in that philosophy would cause the crop nutrient's value to plunge.
That's what happened last summer after Potash's chief rival, Russia's Uralkali OAO
A volume-driven battle for market share "is not going to happen," said Barry Schwartz, chief investment officer at investment management firm Baskin Financial.
Even so, Baskin just recently sold its stake in Potash Corp on concern that BPC's breakup has diminished the pricing power of potash miners. Potash Corp, Mosaic Co
Global demand for potash is expected to rise in 2014, but key importers in China and India have for the past couple of years demonstrated an ability to drive deeper discounts on contracted volumes due to plentiful supplies.
Tilk is the former chief executive of Inmet Mining, a copper, zinc and gold producer that First Quantum Minerals
Tilk, 50, studied mining at Germany's RWTH Aachen University in the 1980s before joining Inmet, according to his LinkedIn page. A Canadian citizen, he will live in Saskatoon, Saskatchewan, where Potash Corp is based, company spokesman Bill Johnson said.
If Potash Corp intended to fight for volume over price, it likely would not have chosen an operations-focused leader over a smooth salesman like Doyle, Spencer Churchill, analyst at Paradigm Capital, said in an interview.
"This guy is more of an efficiency guy, grinding out profits," he said.
In January, Potash Corp forecast a profit of $1.40 to $1.80 a share for 2014, lower than last year, when it earned $2.04 a share. The company's shares are down about 9 percent from a year ago, although they have rebounded more than 5 percent in 2014.
The shares dropped more than 2 percent in New York and Toronto on Monday afternoon, falling slightly faster than those of its North American peers.
Unlike Potash Corp, Inmet was a producer whose rate of production and sales did not significantly affect market prices. Consequently, Tilk's history at Inmet does not reveal his views on supply management, said Raymond Goldie, analyst at Salman Partners.
To be sure, forces outside Potash Corp's boardroom could prompt Tilk to play a different hand than expected. Uralkali continues to operate outside of BPC, leaving supplies less tightly managed than they have been in recent years.
BHP Billiton PLC
Doyle, who turns 64 next month, was expected to retire soon, but bypassing internal candidates for someone with no background in fertilizers might surprise some investors, Scotiabank analyst Ben Isaacson said in a note to clients.
Doyle may be most remembered for fending off a hostile takeover by BHP Billiton in 2010. The Canadian government's rejection of BHP's move is likely to deter any potential suitors from approaching Potash Corp in the foreseeable future.
Tilk is just the latest new face atop the world's biggest fertilizer producers. Earlier this year, new CEOs took the helms of Agrium Inc
Uralkali also replaced its CEO in a shakeup after the collapse of BPC.
The appointment of Tilk followed a three-year search. The company's board decided to start the transition now because an "exceptional candidate" was available, Potash Corp's Johnson said.
Doyle, who served as CEO for 15 years, led Potash Corp through an $8-billion, 11-year expansion of its Canadian potash mines that is nearly complete, freeing up cash for other uses. With Uralkali, Mosaic and Agrium also expanding, however, global capacity exceeds current demand, and another round of cost-cutting by Potash is likely, BGC analyst Mark Gulley said.
Tilk has valuable experience from building Inmet, but Potash Corp is "a mature company" that doesn't need more mines, said Schwartz of Baskin, which is also a former shareholder of Inmet.
"It's going to be a tough job," Schwartz said. "This guy is going to be criticized if he doesn't do something, criticized if he does. So, good luck."
(Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Peter Galloway)